The “early adopter” market is a given, but after that it is a question of economics and the appeal of – and to – the mass market. Bloomberg New Energy Finance suggests that solar and storage in some regions is already cheaper than the grid, but these assumptions are based on certain tariff structures and usage.

One of the key questions is whether battery storage will be taken up as an addition to rooftop solar, with customers choosing to stay on the grid for back-up, or whether battery storage will lead to a mass exodus, as a CSIRO study suggested was possible. Bruce Mountain, of CME, in this piece we publish today, gives a powerful reason why networks are already pricing themselves out of the market.

The Australian market is fascinating for international energy market observers, because it is considered ground zero in the uptake of battery storage, thanks to our high tariffs, excellent sun and high solar uptake. That is what is driving Tesla to identify Australia as its first market, along with the US.

In a report this week, Yonts says that there are “hundreds” of niche markets in the energy industry, but none has captured the imagination like the off-grid market, or the concept of ‘grid defection.’

He notes that it is a more complicated equation than it may seem, depending so much on solar resources, orientation, tariff structure and local regulation, as well as individual household consumption and solar capacity.

But he gives the example of three different Australian families to show just how balanced the equation – of staying on the grid or leaving it – might be. Quitting the grid, he suggests, may not be the economically radical idea that some, and particularly the Australian networks lobby group, like to suggest.

In his scenario, Yonts uses an average household consumption of 7,000kWh a year, and flat pricing through the day of US20c/kWh (Some of his figures may be confusing to Australian readers because he uses US currency).

He assumes that the levellised cost of energy for solar is US$0.10/kWh and the levellised cost of storage is US$0.21/kWh. (He predicts it to fall much further by 2020, see graph below).

Here are his scenarios:

Family No.1 simply buys all its electricity from the grid, for a monthly bill of about US$117, with effective tariff of US$0.20/kWh.

Family No.2 gets one-third of its power from solar and consumes all solar power it produces (good for illustrative purposes; in actuality, quite difficult since most of the family would likely be gone during peak production midday). The remainder is purchased from the grid at the regular cost. The monthly costs (P&L) are US$97, or effective tariff of US$0.17/kWh.

Family No.3 goes off the grid entirely. All of the power they consume comes initially from solar, with an upsized solar installation feeding into the battery bank for consumption in the evening. In addition to producing 7,000kWh each year, the family has to pay for 3,500kWh of storage (or roughly 10kWh per day). The monthly costs work out to around US$120, with an effective tariff of US$0.21/kWh.

“The ideal economic option for our fictional Australian family, assuming they have access to equity and credit, would be to install solar panels and use the grid as a giant battery, saving around US$20/month,” Yonts says.

But, he notes, if the Australian utilities were to put in place an additional network charge for solar households of more than US$20/month and assuming tariffs are expected to be stable, then it no longer makes sense to install panels.

But this changes very quickly if: solar panel installation costs fall even marginally (as Yonts expects they will); battery installation costs fall – even marginally – (as Yonts expect they will – see graph above); tariffs rise (as expected); or the “homeowner was willing to sacrifice US$3/month to tell the utility to get stuffed.”

Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of The Driven. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of The Driven. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

32 Comments

In SA, you need to pay water rates even if you don’t use mains water. If mains water goes past your house, you need to pay. Such a set-up could happen with electricity too.

trackdaze 4 years ago

Thats echoed in qld for water and sewerage. Guess what? fixed cost have risen to the point were its $1000 pa before any water is consumed.

The water and waste beuarocracy keeps getting bigger and further removed from providing a service at reasonable price to the ratepayer. It is we that appear to be servicing the beaurocracy! We are to be milked for all its worth.

To them, the age of entitlement has just begun.

phred01 4 years ago

what’s happened to the principle user pays? Just because there are toll roads around me that I do not use………. do I have to pay tolls

MaxG 4 years ago

This is another money grab by the government you pay with your taxes and ensure profits for the privates.

Jacob 4 years ago

The toll roads are built with taxpayer subsidies unfortunately.

In MEL they even put tolls on roads that did not have tolls before, to pay for road tunnels.

Miles Harding 4 years ago

The correct phrase is ‘loser pays (and pays and pays)’ — and that’s all of us mugs.

There is no reward for being economical.

Jacob 4 years ago

That is outrageous and ought to be replaced by a land tax instead.

mick 4 years ago

when it happened out my way I told them where to go but no future there I also let them know it is undemocratic and that if they tried to establish it in todays landscape they would get blown apart on social media

Reality Bites 4 years ago

Some will be motivated, but still a big risk for new technology. Then for $3 per month you tell the network utility to get stuffed!? Most people spend more than that on a coffee every day. This is extremely marginal and based on a false assumption that power can be used during the day only requiring 10kWh for storage. What about rainy periods? Also assumes full drawdown and recharge of the storage. Eventually the technology will vastly improve and the cost will decrease but it is still no where near being a convincing argument for mass penetration. In any event the next big disruption will be EV’s becoming the norm. Depending on where you live, usage and how many cars you have, in most cases these will not be able to be charged from solar alone meaning that a grid connection will be a necessity.

mick 4 years ago

over the last few years for various reasons there has been an explosion of travel and home ideas/renovation shows often sponsored by 4wd shops and hardware shops.were I about to hit the solar/storage market in Australia I would encourage and support my early adopter customers with an eye to say a weekly 1/2 hr serial targeted at normal hands on people who would be watching the same types strolling around their paddock happily tripping over chooks showing off the vegie patch while rhapsodising about being self sufficient with a neutral footprint.( watch that take off).the fed govt may accidently fund it as educational.

trackdaze 4 years ago

Fact is the networks need to be part of the solution. They do so by ensuring the freeflow of electrons in all directions (particularly so for non poluting forms) to date all theyve done is pretend its the 20th century.

With highly bearaucratic and increasingly politicized management structures and a unionised workforce what are the odds this wont end in tears?

Little wonder we pay one of the highest rates for electricity in the world despite cheap and plentiful resources.

George Michaelson 4 years ago

Any evidence they are putting de-facto “diodes” into the plant? I don’t believe they are, but it would be interesting if a non-intentional second-effect outcome was to set limits on the goldplating benefit for localized storage and generation. My suspicion is that once known, it would cease to be a non-intended outcome.

Glenda Jones 4 years ago

I am confused – I am ready to Invest the $$Thou in an off-grid solar system however I am told I can not disconnect from the Grid totally ! – I read these articles and agree with those who want to tell them to “Get Stuffed” & DIY – It is not an investment if I am at the mercy of an unknown service fee from Energex, which is not a fee for service if you have invested in independence. – Please – can someone tell me if ? and or why ? and where does it legalise 3rd line forcing exemptions for the generators / Tax generators !

Ray Miller 4 years ago

Glenda, see what happens when you do not pay your bill? Waiting for “technology” off grid or “Standalone” power systems? They are last century technology, what has been missing is the scale as what happened to PV, when you grow the scale the price reduces. As a participant in off grid renewable energy systems for some time the “decision” point for a movement to “Standalone” has been ever lowering and increasing the take-up rate. The key is energy efficiency; it is always cheaper to use less then generate more! The “grid” and “cheap” energy has been a disaster, it has encouraged bad design, bad habits, dumb thinking, cost shifting, poor economic investments, high costs and an absence of resilience.

Ultimately for a low carbon future in high density areas we need “a form of Grid” but not the present animal or economic models, distributed renewable generation, energy efficiency, local storage, and management of the resources. The transition at present is painful and likely to get worse.

Glenda Jones 4 years ago

Sorry – I don’t get it ! – I always pay my bills – and I wont accept the Fraud of global warming which is solely for the purpose of lumbering us / the citizens with another Tax. – electricity Tax! – I already pay for contaminated water that I can only use to wash the car, not even the plants like it. I buy my water in a bottle. – The planet earth has been warming for millions of years, and grand fraud by the Government (Pollies) to unload you of more of your income by billions of $$$ will not cool down the earth at all. – Its simple – the electrical generators want to rort you in a dying spurt as their business model evaporates – instead of building customer relations so as to become a “Business of Choice” as do most small, medium & Large corporations in a competitive market – they want to be the big bully boy as they only know the Public Service model of “Force em – we will – Force em”! – I say get Stuffed !

Ray Miller 4 years ago

I just made the point that disconnection from the grid is easy and has happened to a number of people even accidentally for non payment of bills or people moving house or anything. So you can go off very easy, just cancel your service. Burning of fossil fuels contaminates the environment with toxic pollutants, history shows London had a big problem and then they stopped burning coal locally for heating, China may have a similar problem? But its probably a government conspiracy why they are shutting down old coal plants and installing renewable energy plants in an unprecedented way?

Glenda Jones 4 years ago

Disconnect to me is disconnect – not close the account. For me it is “remove those wires from my property, I no longer wish to do business with you!” – eveeeeeeer ! – This situation in Australia is a disgrace – Where did our Fight go ? we get extorted, bullied, by monopolies – Govt monopolies, paid for by us mug minions. – Fight Back !

Miles Harding 4 years ago

They must have a mechanism – this is what happens when a house is demolished. From my observation, the on-line documentation makes the assumption that one only ever moves house or builds a new one, but never demolishes or removes a power supply.

Maybe foil them by requesting a demolition disconnection. There may be some unintended consequences, such as the habitation certificate being withdrawn.

I would suggest an intermediate step: Install a changeover switch after the meter that disconnects the incoming feed and connects the off-grid inverter. This allows you to capitulate and return to the grid for a few days per year and may be actually be economically effective when the reduced battery and PV requirements are considered.

After some time of zero consumption it would be a lot easier to look into forcing the network provider to disconnect you and pull the wires back to the street. Possibly, a lawyer’s letter or the ombudsman will be needed (to kick some arses).

Good luck

Solar Sparky 4 years ago

As listed above by Miles.

To ensure you don’t get your habitation certificate withdrawn, have the stand alone power system installed initially as a grid-connected hybrid system with battery backup. Now you have permanent power (as long as the battery lasts) even if the grid is disconnected.

While in essence I agree with peoples desire to leave the grid, I would offer a couple of cautionary notes. What about those who simply cant afford to leave the grid behind such as the elderly of young kids starting out etc and as we all walk away from the extortion of the grid, what will happen to the businesses that we all relay on for our paid employment that perhaps simply don’t have access to enough real estate to go off grid or are to big to be able to in terms of available land etc. There are economies of scale that are dependant on a mass market, if the mass goes out of the market, how will the rest of society continue to function ? While in essence I agree with the desire to show the finger and walk away, there has to be a smarter way to go forward from here, or suffer the consequences of our selfish economics at our own peril. This is not just a question of doing the math to see if “I” can save a few dollars, there are many much broader social issues that I haven’t seen mentioned once in all of these comments. May I suggest we all need to stop thinking of ourselves and start to think how collectively me be able to contribute to a better outcome for the greater good!

Hello Giles – Electrical Contractors and Solar installers have told me you cannot disconnect totally the connection from the Poles. You will always be connected and pay a service fee even if you use no grid power. No one can or will show me where in the electricity act it commits me to the grid connection. – My view is I paid for the connection and it is therefor mine. – Nobody I have spoken to will remove the connection after a solar install. – if that is the case I will be paying for a service fee as well as supplying my own generator.

phred01 4 years ago

like many others my wish is to use the phrase “Get Stuffed”

MaxG 4 years ago

🙂 I already use the phrase “get stuffed” — it feels great. Care factor simply goes to zero WRT whatever BS the electricity market is doing. My system has a 20kW battery (18kW usable = LiFePO4 @ 20%SoC), 12kW in panels and supports us 98% of the time. However, it did cost 50k$. Considering how much many is wasted on consumerism, it felt great to show the finger, and simply do not have to bother with the clowns anymore. It was and still is worth it! 🙂 The way I see it, no matter what technology comes along and what the cost might be, the powers to be will price their electrons borderline before defection… meaning, to go off-grid is IMHO only an option for the more radical ones; who rather forgo a new car and whack the money into an off-grid system.

mick 4 years ago

I know some kids from the Barossa who have sold up and moved out to marginal country to avoid petty bs and rising costs,set up pv/storage as part of a package with the builder happy as and not robinson crusoe either

George Michaelson 4 years ago

Whats the legal position on a body corporate using the sinking fund to do communalized solar/PV/storage? In principle, is this legal?

Barri Mundee 4 years ago

I don’t see why it should not be legal but it will require a majority of owners to approve it. Sinking funds tend to used more to provide for long term but known maintenance and common facilities replacement.

Phil 4 years ago

If you can diy it has many benefits and can be done now.The reliability is much higher than mains and i did a kit home build and had none of the “look up and live” issues with trucks and materials coming and going as there are no aerial power cables. Some sales rep called in and tried to sell me electricity and i said “can’t you see something is missing ? ” as i pointed to the power poles that stop 120 meters away. I bought a block with no power because i think one day they may make people contribute like sewer and water even if you don’t connect because it goes past your house.

Phil 4 years ago

I think what is not understood by the electricity companies is that modern appliances are now so efficient that the average power consumption has halved over the last decade. And the peak current issue of old fashioned motors has dropped by 700%. This is all due to direct drive and dc drive motors in front load washing machines , inverter air cons and inverter fridge compressors, led lighting and led tv backlighting , laptops and not pc’s , induction cooktops , the list goes on and on.The loads are far less so going off grid is a matter of “recrunching” the numbers each year as the demand drops along with the costs of some of the off grid technology – even with the low aussie dollar.

Ian 4 years ago

$1.50 a day for 7 years will buy you $3000 finance (@5%). That is the cost of staying connected to the grid, or conversely that is the amount that can be used to help disconnect from the grid. Assuming 3.5KWH of energy use at night, a battery would save import – export tariff ,about 17c/KWH = 60c a day. Using the financial formula above, this buys you roughly $1500. Anything over $4500 for a standalone battery storage is the cost to tell the network to get stuffed. The privilege of saying ” get stuffed” may cost you over $10 000 for this size battery storage.

There is a chance that battery storage will drop in price to 1/2 what it is now in 2 years. Biting your tongue for the two years may save you $5000 on this system.

Rob S 4 years ago

What happens when enough people tell the grid to get stuffed? The government owned corporations make huge losses but can’t close down as there are many people out there that cannot for various reasons (cost, location, etc) go off grid. So the government props them up as essential services and we all get to pay for it anyway through increased taxes. Not really an awesome solution. Oh yeah what happens to the big solar and wind farms that are so strongly supported by us all…they are on the other end of the grid…?? Wholesale prices aren’t causing the pricing issue….

Miles Harding 4 years ago

I feel that telling the network and retailers to ‘Get Stuffed’ is not a good long term solution. Presently, is it necessary when faced with the wall of jerks that comprise these retailers and network operators, preventing fair and transparent operation of what should be a public facility.

Another reason to exit the grid is to protest the unsustainable way the cost of energy is evaluated. No account of the environmental cost is made in the provision of energy, so the most cheapest (and most polluting) source is the only option being considered at any scale today.

Considering that annual electricity consumption is near 200,000GWh, the pitiful 33,000GWh RET is manifestly inadequate to deal with emissions and represents window dressing at its worst and is cause itself to protest by exiting the grid.

As part of any sustainable or off-grid solution, transport must also be transformed to a sustainable form. It is alarming to think that the low oil prices we are presently enjoying are the result of a very small oversupply, in the region of 2% of the total consumption of 92Mb/d. It is only a matter of time before this turns around and a 2007-like environment returns. I don’t believe we have very much time to do something, more likely in the timescale of months instead of years.